How do I invest with only twenty dollars to spare each month?

It was most recently asked by Jacqueline Robinson of TX in response to a US News article that I contributed to:

Basically, I would have to put back pennies at a time and hope that one day it will add up to a nice saving for me in the future. Ok, yes I would like to have that special person to come onto my job at Sobway and say, I read your story on the us news and how I feel that this money would benefit you more than it would me at the moment, or that you are the lucky winner today. Well, that would be living in a fantasy world, so if I could get some good, strong suggestions on how to save money and invest at the same time for my future I would leave El Centro College in Dallas TX with a smile on my face.

Well, Jacqui, I’m certainly not going to come into your ‘Sobway’ for a sandwich and write you a check for $150,000 as a ‘tip’ as you will no doubt lose it pretty quickly because you need to first learn the lessons of money before you make your money so that you can keep your money 😉

The question is normally asked in a manner that suggests: “$20 is such a small amount, what possible difference can it make if I save it instead of spend it?”

Well, in some respects I understand the ‘losing attitude’ because even if you faithfully save $20 each month and somehow manage to match the 30 year ‘guaranteed’ stock market return of 8.5% compound (ignoring fees), after 30 years Jacqui will have saved less than $30,000 (which is worth less than $9,000 in today’s money if inflation averages just 4%).

But, Jacqui will no doubt be receiving better and better jobs and at least increasing the $20 monthly savings with inflation (won’t you, Jacqui?), so she should end up with something approaching $45,000 (or, less than $14,000 after inflation) …

… so, I share her implied pain.

But, with $20 a month you can rent a stall at a market and sell on consignment seconds from local manufacturers (that means that local manufacturers will gladly let you have a bit of their not-quite-right stock on ‘loan’ until you can sell it and pay them a pretty cheap price) … or, one of a hundred other ‘micro businesses‘ that require little to no start-up funds.

With the couple of hundred dollars a month that you might make from that activity, you might be able to build up a ‘nest egg’ 10 times larger than before …

… better yet (because, who can live the rest of their lives off the equivalent of $140,000 after inflation … total?!) use that money to gain a higher education and/or start an internet-based business that might make you an extra few hundred dollars a month.

With, say, an extra $700 a month you could ‘retire’ after 30 years with the princely sum of $450,000 (in today’s ‘after inflation’ dollars) or use that few extra hundred dollars a month to start a ‘real’ business … one that can …

8 thoughts on “How do I invest with only twenty dollars to spare each month?”

I think that one of the lessons that successful people learn along the way is that when you focus more on what you CAN do(even if it’s just 20 bucks per month)and what you WANT out of life, then take ACTION to do what you can now, life seems to correspond to you some how and that’s when you seem to become one of those “lucky” people over and over and over again, that everyone seems to think has it easy and just magically has a high income. Then and only then, 20 bucks per month quickly becomes 200 bucks per month and before you know it, it’s somehow 2000.00 bucks per month.

From my personal experience, that’s how it always seems to happen with anything I’ve personally ever accomplished. It’s as if the universe we live in looks at you and shakes it’s head and says “No, no, no, it’s BE, DO, HAVE! Not “when I HAVE it, i’ll DO what i’m suppose to with it, then i’ll BE it(wealthy)”

The moment I began to look at our income(when it was small and nonexistent and we were living paycheck to paycheck in debt up to our eyeballs)and look at our expenses, then looked how we could cut those expenses and create a few bucks of wiggle room to start making more responsible financial decisions, things seemed to take off and don’t seem to have any current end to how they are currently take off.

What an clever idea, starting a micro-business … I don’t think I would have though of that.
It goes to show you, you don’t always need money to make money – just a clever idea and the willingness to take action.

@ TStrump – “clever ideas” are a dime a dozen [or, even free … if you are stumped, just find one that you like and steal it 😉 ] … but, if “willingness to take action” could be bottled, I’d buy it all up and sell it to the hopeful and hopeless masses as THE secret to success.

That’s it… “willingness to take action”. Great post! I think I will show it to my kids to help them understand that what little money they obtain from their allowance can help build there wealth (my 9 year old already bought coloring books and craft stuff and is selling her products to my coworkers, friends, and family! lol! Now if I could just get my son on the same track)